Indian business owners loose top spot to Chile for 1st time in last 5yrs: Grant Thornton

India Infoline News Service | Mumbai |

Outlook for 2010 buoyant among privately held Indian businesses. Optimism bounces back amongst businesses around the world, other than in Europe & Japan

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Optimism amongst privately held businesses (PHBs) around the world has bounced back to give the Grant Thornton global optimism/pessimism index for 2010 an optimism balance* of +24%, compared to its lowest ever score of -16% this time last year. The International Business Report (IBR) survey of over 7,400 PHBs across 36 economies, now in its 18th year, also highlights a group of ten economies where businesses are more optimistic about the outlook for their economies than International Monetary Fund (IMF) forecasts might suggest.

Businesses in Chile, India, Australia, Vietnam and Brazil are the most optimistic in the world, all scoring over +70%. Close behind are South Africa, mainland China, Singapore, Canada and Hong Kong (which showed the biggest swing of sentiment from 2009) at +60% or higher (see figure 1). At the other end of the scale, many eurozone countries remain pessimistic about the future; Italy, Denmark, Finland and France all scored +9% or lower with Greece (-23%) and Ireland (-42%) even more gloomy. Spain (-56%) and Japan (-72%) kept their places as the most pessimistic economies in the world, although even here the figures were slightly up on last year.

When compared to the IMF's GDP figures for 2009, economies that avoided recession (for example, Australia, mainland China, India and Vietnam) or suffered a relatively minor recession (such as Brazil, Hong Kong, Canada and New Zealand) all feature, not surprisingly, at the top of the league table.

The figures for India show Kolkata to be most optimistic about our country’s economy over the next 12 months followed by Mumbai and Delhi. However, most Indian PHBs believe that the economy will see a significant upturn only by the second half of 2010 or indeed only by early 2011.

Vishesh C Chandiok, National Managing Partner at Grant Thornton India, commented, "The optimism amongst Indian business owners has increased marginally year on year, however India has lost its top position in the Index for the first time in 5 years, and is placed as the second most optimistic country. This optimism is evident in the marketplace as companies find access to capital improving, see exports growing and see demand increasing. The changes in the World economy over the last 12-18 months would only hasten the pace of emergence of India as a major economic power. However, there are many social and economic challenges this country faces, and the Government needs

Optimism bounces back amongst businesses around the world – page 5

to do more to seek the support of privately held businesses as it seeks to implement its reform agenda."

The survey also found that expectations of increased revenues in 2010 came out highest (at +40%) when respondents were asked to rank likely business trends in 2010. Increased turnover was followed by the surprisingly positive view that investment in plant and machinery (+31%) and profitability (+29%) would both increase. Businesses were much less hopeful about selling prices with 21 out of 36 economies less optimistic about increasing their prices than they were in 2009.

"This suggests that during the recession privately held businesses have become leaner and more cost effective which may enable them to lower prices while still securing increased revenues and, more importantly, profits. As the global economy emerges from recession, we are likely to see many businesses reaping the rewards of recession induced efficiencies to lead the way in the upturn" said Vishesh.

When asked about employment expectations in 2010, European businesses were far more pessimistic than their counterparts elsewhere in the world; a negative balance of -1% in Europe compared to balances of +33% and +42% in Asia Pacific and Latin America respectively. All countries who recorded negative balances for employment were European, led by Ireland, Italy (both -14%), France (-10%) and Spain (-8%).

Optimism bounces back amongst businesses around the world – page 5

Vishesh adds, "Privately held businesses contribute 81% of global GDP, and the global business community should be encouraged by the results of this survey. Many people blamed globalisation for the speed of the downturn but we are now seeing that globalisation may also help us accelerate out of recession. This survey suggests that businesses in the giant emerging markets of mainland China, India and Brazil are confident that they can help to pull the rest of the world back into growth and businesses in many other economies are equally optimistic (in some cases more optimistic than they have been for years) that they have not only survived this recession but are well placed to help drive the upturn, and see their business grow as a result. European governments, in particular, will hope such optimism is well founded."




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